Bond Tuesday Tomorrow

20th September, 2010

Stock Market Rollercoaster

The FT is reporting that the ECB had to intervene to buy Irish Government bonds last week. This isn’t too surprising. I have no doubt at all that the ECB has been active in government debt markets over the last number of months. In an illiquid atmosphere somebody has to be active. The bit that did shock me though was that the report states that the intervention was in the tens of millions of euros. This is an incredibly small intervention for the ECB to make but begs the question – are things so bad that we can’t get the markets to buy such small amounts of debt?

Tomorrow is another auction today. Despite the growing hype I don’t think there will be too much of a problem with the sale. The amount if small (€1 billion) and consists of two different sales. The yield will also probably be lower as the bonds are for shorter time periods.